Almost one year into my “apprenticeship” as a technology start-up CEO I found it was time to take stock of achievements, critically reassess my position and then plan for the next phase of growth. Balancing the capital requirements of the business has proven to be the biggest challenge.
I read somewhere recently a suggestion that there is “an inverse relationship between the amount of capital available and the level of creativity in a start-up.” To some extent this is true. With too much capital in the bank there is a lot less urgency to get your product built and consequently innovation happens at a much slower pace. But when a company needs to find the cash to pay for rent and employees each month, building a brand and growing revenue certainly come into much sharper focus. However, bringing in an investor should not be a priority at an early stage because it may result in divesting too much control at a very low price. If possible, put your assumptions to the test first.
On the other hand, running a capital starved business is like flying an aircraft without enough fuel in the tanks. You won’t make it to your destination and you may well end up wrecked in some farmer’s turnip field. Hence, we train pilots to load sufficient fuel for the planned flight plus an additional fixed margin for safety. Most experienced pilots add a little extra on top of this, especially if the weather is inclement. When the economic climate is adverse, it is not the time to be short on financial fuel.
We’ve made huge progress since we launched iWantMyName last December and I’m very proud of what the guys have already achieved. The good news for ideegeo is that the site has growing revenues and is only the first of several spin-off projects as we build and test our internal capability. The bad news is that we have entered a mature market in a highly competitive industry with this first project. That means we have no choice but to offer the best user experience and market our product powerfully.
Something else I read recently. “Overnight success” can take years, especially in the technology sector. That is why I realised that it was time to sit down, readjust my self-imposed frame of reference and plan for more growth (and more hard work). If consumers see value in the product, cash will continue to flow into the business; if not then it will soon become an expensive hobby. The key will be to add smart services that differentiate iWantMyName from other offerings in the market.